Sell in May......

silverharp

Interesting time in the markets at the moment , I put together some things I am looking at to see if I can catch an intermediate trun in the markets. Since last summer I was looking for the Oct crash then a rebound out to April May and then a continuation of the bear market. So with Bernanke calling an end to the recession later in the year and very high sentiment readings in the markets , now is the perfect time for the decline to start
I'm not trying to short the top, I'll be looking for a break on weekly charts before considering shorting. Good candidates will be Base metal mining stocks and the S&P
Feel free to comment, disagree ;-)

ranger4

I agree, a pullback is looking likely with profit taking before start of next leg up possibly starting end of may- june, should we also expect a Larger leg down with expected bad credit card and personel borrowing debt looking to be next obstacle to overcome? I am also wondering will we see a partial retest of march lows triggerd by the credit card and personel borrowing bad debt possibly later this year?

silverharp

ranger4 wrote: »

I agree, a pullback is looking likely with profit taking before start of next leg up possibly starting end of may- june, should we also expect a Larger leg down with expected bad credit card and personel borrowing debt looking to be next obstacle to overcome? I am also wondering will we see a partial retest of march lows triggerd by the credit card and personel borrowing bad debt possibly later this year?

I've no idea of the possible magnitude of the pull back , I know some well known bears that are looking for a higher run after the pullback but are still fully convinced its still a bear market. I'd like to see this run as beiing the high for the year possibly with a choppy summer and much lower lows later in the year
Indeed watch for credit conditions to fall apart later in the year in the commercial property market and consumer credit etc. Rising interest rates in the bond market will start to affect other markets

ranger4

silverharp wrote: »

I've no idea of the possible magnitude of the pull back , I know some well known bears that are looking for a higher run after the pullback but are still fully convinced its still a bear market. I'd like to see this run as beiing the high for the year possibly with a choppy summer and much lower lows later in the year
Indeed watch for credit conditions to fall apart later in the year in the commercial property market and consumer credit etc. Rising interest rates in the bond market will start to affect other markets

Hello Silverharp, So you feel a retest of march lows could occur later on this year with retest even going sub march lows? also do you feel the impending commercial property and consumer spending slide will be main trigger for sending us lower?

thebang

silverharp wrote: »

I've no idea of the possible magnitude of the pull back , I know some well known bears that are looking for a higher run after the pullback but are still fully convinced its still a bear market. I'd like to see this run as beiing the high for the year possibly with a choppy summer and much lower lows later in the year
Indeed watch for credit conditions to fall apart later in the year in the commercial property market and consumer credit etc. Rising interest rates in the bond market will start to affect other markets

Hello silverharp you mentioned base metals in you op, and I have a question for you.

Gold as an investment has never made any sense to me, and has depreciated in real terms over the past 30 years.

Call me sentimental, but all I see it as useless lump of metal. I know people talk about it as a hedge, but it is seems like a pretty dirty hedge, and I would hope that was better and more solid insurance out there.

This combined with recent high prices would make me guess it is a good short at some point. Also some have commented that iyt could crash when the yields on treasuries go higher.

How do you think you would get the timing on this right?

silverharp

thebang wrote: »

Hello silverharp you mentioned base metals in you op, and I have a question for you.

Gold as an investment has never made any sense to me, and has depreciated in real terms over the past 30 years.

Call me sentimental, but all I see it as useless lump of metal. I know people talk about it as a hedge, but it is seems like a pretty dirty hedge, and I would hope that was better and more solid insurance out there.

This combined with recent high prices would make me guess it is a good short at some point. Also some have commented that iyt could crash when the yields on treasuries go higher.

How do you think you would get the timing on this right?

I wouldnt be too hard on gold, clearily if you had bought it anytime from the mid 90's you would have out performed the Dow as of now. I'm not a goldbug but at the same time gold is money and it is useful to own when there are disruptions in the money system. There was no reason to own gold in the 80's or 90's. I think at the top in 2000 it took 46oz of gold to buy the Dow, now its 8 or 9 and by the end of this bear market at a minimum I'd expect 5 and possibly down to 1 for example gold $1000 and the Dow 5000 , in 1980 the ratio hit 1:1
I am following a perspective on gold that uses the real price which roughly is gold divided by the commodity index, if you look at the gold silver chart I posted you will get an idea of what I am saying ie that in a boom gold underpeforms commodities so in 02/03 Oil or copper would have made a better investment then gold and from mid 08 switching from commodities to gold was the smart move. I'm leveraging this view by investing mainly in gold companies as their earnings will go up as their commodity inputs go down in price. Now as gold co. shares follow the markets as well there are times to be in or out.
Could gold go down in price, sure , I could see it going down to $600ish but then oil would be at $20. I'd say gold does very well treasury rates are rising as there will be a lot of value lost for people holding long dated treasuries.


Ranger4 , absolutely I see nothing yet that from a market perspective we are not following a 29-32 market , not sure what the trigger will be , it will be just more a change in perception that the worst will not be over 6mths ahead.

I'm only posting this as I just came across it but not a bad snapshot

ranger4

silverharp wrote: »

I wouldnt be too hard on gold, clearily if you had bought it anytime from the mid 90's you would have out performed the Dow as of now. I'm not a goldbug but at the same time gold is money and it is useful to own when there are disruptions in the money system. There was no reason to own gold in the 80's or 90's. I think at the top in 2000 it took 46oz of gold to buy the Dow, now its 8 or 9 and by the end of this bear market at a minimum I'd expect 5 and possibly down to 1 for example gold $1000 and the Dow 5000 , in 1980 the ratio hit 1:1
I am following a perspective on gold that uses the real price which roughly is gold divided by the commodity index, if you look at the gold silver chart I posted you will get an idea of what I am saying ie that in a boom gold underpeforms commodities so in 02/03 Oil or copper would have made a better investment then gold and from mid 08 switching from commodities to gold was the smart move. I'm leveraging this view by investing mainly in gold companies as their earnings will go up as their commodity inputs go down in price. Now as gold co. shares follow the markets as well there are times to be in or out.
Could gold go down in price, sure , I could see it going down to $600ish but then oil would be at $20. I'd say gold does very well treasury rates are rising as there will be a lot of value lost for people holding long dated treasuries.


Ranger4 , absolutely I see nothing yet that from a market perspective we are not following a 29-32 market , not sure what the trigger will be , it will be just more a change in perception that the worst will not be over 6mths ahead.

I'm only posting this as I just came across it but not a bad snapshot

Thanks for posting chart.

pirelli

thebang wrote: »

Hello silverharp you mentioned base metals in you op, and I have a question for you.

Gold as an investment has never made any sense to me, and has depreciated in real terms over the past 30 years.

Call me sentimental, but all I see it as useless lump of metal. I know people talk about it as a hedge, but it is seems like a pretty dirty hedge, and I would hope that was better and more solid insurance out there.

This combined with recent high prices would make me guess it is a good short at some point. Also some have commented that iyt could crash when the yields on treasuries go higher.

How do you think you would get the timing on this right?

If our goverments are printing money as fast and as quickly as possible, then there will be inflation. Inflation will mean GOLD prices rise. If we are looking at inflation on a large scale then Gold will push 1.1-1.2K a troy ounce.

thebang

Thanks silverharp, you seem to have good explantion for what is going on. In fairness I know my reasoning on gold may be overly subjective.

One thing I am looking at at the moment is put options (buying not selling). Is there anything worth checking out for the next month?

silverharp

thebang wrote: »

One thing I am looking at at the moment is put options (buying not selling). Is there anything worth checking out for the next month?

I dont have an options account myself but an old fav. is buying puts on the large Silver stocks like Silver Standard (SSRI). You have a hint of a commodity turn with Copper but would look for a turn on the gold silver ratio and the S&P as a confirmation.
I have a target on the S&P of 950ish based on a 20wk Bollinger band, a weekly break on this would get me heavily short your index of choice.

silverharp

bump. looking good so far , would like to see how this unfolds over the next week or 2 , weekly breaks on indexes should indicate that this is more then a quick pull back